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Loss-leader selling: framing in Canada and the United Kingdom and information gathering in the retail sector

Many consumers are attracted by low prices. Retailers know this and, to generate in-store traffic, often advertise very attractive discounts - call-off prices - on certain items. This is perfectly legal, and demonstrates the efficiency of the market economy.

Other retailers, who seem to use the same tactics, advertise products they have no intention of selling at very low prices. Once in the store, consumers are directed to other products that are more profitable for the retailer. This deceptive commercial practice is known as "bait and switch", and is illegal in Canada and the UK.

In Canada, laws govern certain aspects of the sale of call-off products. For example, if a merchant is temporarily out of stock of an advertised item, Canada's Competition Act and Quebec's Consumer Protection Act provide means of compensating consumers. Our research suggests, however, that some of the means provided by these laws are contradictory, and that an effort to standardize them is needed to better protect consumers.

By means of an information-gathering exercise, we ascertained whether any merchants had any of the items advertised in their flyers in store or in warehouse. We wanted to know if these merchants used any form of bait-and-switch. The products selected were generally in-store or deliverable within a reasonable time from the retailer's warehouse at the time of collection.

We then took a look at merchants' policies to find out what was expected if an advertised product was temporarily out of stock. Our review of flyers, websites and stores revealed that this policy is rarely posted. To better inform consumers of their rights, we believe it would be appropriate for public authorities to oversee the posting of such policies.